How your credit score raises your premium

THE SECRET SCORE BEHIND YOUR RATES

You’ve heard of the FICO credit score? Meet the version insurers use to figure how much they can charge you for a policy—a score they have no legal obligation to show you.

How your credit score raises your premium

Your score is used to measure your creditworthiness—the likelihood that you’ll pay back a loan or credit-card debt. But you might not know that car insurers are also rifling through your credit files to do something completely different: to predict the odds that you’ll file a claim. And if they think that your credit isn’t up to their highest standard, they will charge you more, even if you have never had an accident, our price data show.

Cherry-picking about 30 of almost 130 elements in a credit report, each insurer creates a proprietary score that’s very different from the FICO score you might be familiar with, so that one can’t be used to guess the other reliably.

The increase in your premium can be significant. Our single drivers who had merely good scores paid $68 to $526 more per year, on average, than similar drivers with the best scores, depending on the state they called home.

And your credit score could have more of an impact on your premium price than any other factor. For our single drivers in Kansas, for instance, one moving violation would increase their premium by $122 per year, on average. But a score that was considered just good would boost it by $233, even if they had a flawless driving record. A poor credit score could add $1,301 to their premium, on average.

$214

Average difference paid by drivers with “good” score vs. those with the best score